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Real GDP and nominal GDP | GDP: Measuring national income | Macroeconomics | Khan Academy

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Using real GDP as a measure of actual productivity growth Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/macroeconomics/gdp-topic/real-nominal-gdp-tutorial/v/gdp-deflator?utm_source=YT&utm_medium=Desc&utm_campaign=macroeconomics Missed the previous lesson? https://www.khanacademy.org/economics-finance-domain/macroeconomics/gdp-topic/GDP-components-tutorial/v/examples-of-accounting-for-gdp?utm_source=YT&utm_medium=Desc&utm_campaign=macroeconomics Macroeconomics on Khan Academy: Topics covered in a traditional college level introductory macroeconomics course About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy's Macroeconomics channel: https://www.youtube.com/channel/UCBytY7pnP0GAHB3C8vDeXvg Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
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Text Comments (103)
Mou Savi (28 days ago)
You legend brother
kaia lulany (3 months ago)
just spent my last 5 weeks sleeping in and out in class and now my midterms test is in a week. this will save me from failing my macroeconomics class i know it
Carlo lapuz (3 months ago)
i finally understand for real!
Mesbah Emami (4 months ago)
So why many countries GDP is much higher than GDP nominal?! As you said GDP nominal should be higher...
aguarnes (6 months ago)
You lost me after apples
Immanuel P (19 hours ago)
Magster z (2 months ago)
I'm lost laughing after your comments.
mar koll (4 months ago)
actually, that technic, even if the example was with apples or bananas or PCs, is so efficient and gives you the main idea of what Real GDP is so simple!
Luke Beauchamp (7 months ago)
Is year 1 always the year in which the country was founded? How do you compare real GDPs from countries that were founded in different years? As more inflation would occur in 200 years than 50 years.
Rushabh Rajput (1 year ago)
Khan Bhai Thank you so much now I am cleared with Real and Nominal GDP.
Please advise: What does it mean when we have a decrease in Nominal GDP and a increase in real GDP both compared the year before? Thank you.
BB Cali (1 year ago)
Clear and concise. Thank you for explaining so well!
So nominal=wealth ppp=quantity? So it means that if for example britain has a nominal gdp higher than russia but russia has a higher ppp gdp, britain is wealthier but russia is more productive?
AraelIlabaca (1 year ago)
Dawson Walters (1 year ago)
Thank you!
divyaraj singh (1 year ago)
Really....this has become my last and ultimate resort to clear my concepts..thank u from core of my heart.
PARTH VATS (1 year ago)
awesome very good representation by graph
Mahmood Salim (2 years ago)
Thanks for your great explanation. You make it easier
MrSpirit517 (2 years ago)
Im not sure why, but that calculator made me laugh :D
malthus101 (2 years ago)
Yeah but... how far back do we price adjust? From the first quarter that GDP was ever measured, like in the 1950s or whenever it was??
Roger Lignugaris (1 year ago)
Yes, we adjust back to the very beginning. Real GDP in 1789 should be comparable to real GDP in 2017. That's the whole idea, in fact.
Refentse Azania (1 year ago)
malthus101 you adjust by the base year
Simran Wadhwani (2 years ago)
Awsummm explanatn sir Thnk uhh soo much Was really helpful
dollyandsandy (2 years ago)
This is fantastic. Thank you.
Sara Ahmed (2 years ago)
I love this guy when I hear his voice I know am passing at least with an -A❤ much respect
Mohsan Ahmad (1 year ago)
he does have a nice voice
Le-Phuong Nguyen (2 years ago)
bless ur kind soul. u are better than my prof lmao
duhawma (2 years ago)
I finally get it! Thank you Jesus!
Pawan Dallakoti (2 years ago)
Nikki V (2 years ago)
This was extremely helpful!
bill the bodybuilder (2 years ago)
James Ng (2 years ago)
i wonder why we dont take gdp y2/inflation rate?
Roket Android (3 years ago)
Let's say: if you want to assess the growth of productivity of a certain country during a period of time - use PPP GDP figures, BUT if you want to compare current productivity of say two countries against each other - use nominal GDP figures. Any opinions?
Roger Lignugaris (1 year ago)
You're going to have to get manhours worked in there, somewhere, to compare productivity. Productivity is output per manhour, after all.
Roket Android (2 years ago)
@Sandeep Kaur ?
Sandeep Kaur (2 years ago)
Inspirare (3 years ago)
I think that measuring the growth in productivity of a country over time should be done in real GDP, not PPP GDP. If you're only looking at one country then you'd want to take the real GDP value as it mitigates inflation (thus, showing you only how much productivity increased rather than prices). Additionally, the currency of that country makes no difference because it's the same currency that's used year after year. I think PPP GDP should be used when comparing the productivity of two countries because of currency differences. For example, comparing a GDP value in British Pound versus US Dollar is meaningless because each currency is valued differently. This is when you'd want to use PPP to compare GDP.
Will R (3 years ago)
I had an idea but some doubts. Your explanation solidified my understanding. Thanks a bunch for taking the time to make this video. I wish those who did not like "like" on the video would explain what they see wrong with this video.
Veronica Leung (3 years ago)
I actually understand it... incredible! :D
Sarah (3 years ago)
Thank you so much!! This is by far the best explanation of real GDP and nominal GDP!
By Oakk (3 years ago)
thanks you are really good at explaining the difference! i have a test tommorow fml
By Oakk (3 years ago)
passed thanks man aha, this video saved me
Almighty_Pain (3 years ago)
+By Oakk How did you go?
Asad Janjua (3 years ago)
I am so much in debt to you for teaching me so much! :)
bagondreamer (3 years ago)
the axis should be switched: quantity as x and price as y
NoMor (2 months ago)
aHR0cHM6Ly93d3c1LnppcHB5c2hhcmUuY29tL3YvVnppdFhRcU8vZmlsZS5odG1sCg== ACDC Macro Review Packet for those those interested. Your welcome ;)
Robby Arnoldi (3 years ago)
real help sir ~~
Vixon Joyce Monk (3 years ago)
Brilliant, thank you so much, made that a lot clearer :) 3 hours and a bit till my exam and been up all night :)
Natalie Harshman (3 years ago)
Thank you! :)~:~
bubascary (3 years ago)
Brain goes oooooooooh, thankyou!
Niraj Budhathoki (3 years ago)
Exactly, what a awesome explanation. You are legend. Thank you very much.
Rahul Nryan (3 years ago)
Prosper King (3 years ago)
@khan academy. How can I get that calculator you're using? And what is the name of it?
Abhishek Ravindra (3 years ago)
You can get webbitemu.
Jana Ross (3 years ago)
Makes this very easy to understand!! Thanks
romil agarwal (4 years ago)
Very nice way of explaining the concepts.
Nasha Naufal (4 years ago)
Wow thanks for explaining that, I have always wonder what's the difference between Nominal and Real GDP means
Rebecca Upputholla (4 years ago)
Wow, that was helpful, thanks!
kaisootrash (4 years ago)
Nnnooow I'm starting to understand it better. Gonna watch the whole series so I can ace this test. Thank you as always.
Alex Delarge (4 years ago)
@4:30 Why does 1200/.55 = 2181.8 not 218.18 ???
Matt Man13 (2 years ago)
Palm to face
Soursdey Chhun (4 years ago)
thank you so much I can understand more than my teacher explain me lol 
Katy Marsh (4 years ago)
this is so rad
The Sweet Aussie Life (5 years ago)
Finally understand it.  Thanks
shadowrunt21 (5 years ago)
Would this level of economics be considered (senior) high school/ first semester of Uni type of work?
GiddyGherkin (5 years ago)
both. In this case economics the info are bascially the same for uni and highschool. Uni cover highschool related subjects and sometimes they build on it.
Ygnez (5 years ago)
high school
Benjamin Wetherbee (5 years ago)
Mmmmm TI-85 Rom... Would it be accurate to measure this against the population?  In my mind it would be similar to an artificial interest gain in a bank account where that interest is actually lower than inflation in currency.  Say you made $50 one year on an account with $20,000, but inflation for that year was 1.7%.  Effectively, you've still lost money.  The point would be that even if production goes up, it could and probably does go down per capita. 
Mitchell Davies (5 years ago)
This is amazing!
Dave Suchanek (5 years ago)
As an economics teacher we, as do most economics textbooks, graph "P" on the "Y" axis and "Q" on the "X" axis - continuity is key for teaching economics.
Sim Solace (5 years ago)
That measures inflation, and it is simple. It just asks you to see inflation as percentage. It is important. Real GDP and Nominal GDP and Index measures are 2 different things.
317andrew317 (5 years ago)
Thank you so much Kahn! You explained it so much better than my macro book. They want us to use some stupid price index shit which is confusing, thanks again mate!
Ahmed Ali (6 years ago)
holy shit 720 streams faster than 360
ageddull (6 years ago)
should be 2181 lb of apples, cause technically 0.8 of an apple isn't an entire apple sold. great video tho, keep up the good work :D
Miguel Branco (6 years ago)
Shooting for that A+ on the 1st year Macro Econ midterm tomorrow, and I'm a C student. Made possible by the one and only Khan.
CaptainFoxButt (6 years ago)
oh, you khan't be serious!
Cecil clover (6 years ago)
thank you. there is no other like you
Warden (7 years ago)
You know shits going down when sal pulls out his TI.
Magdiel Zuniga (7 years ago)
Playlist is titled "Microeconomics and Macroeconomics"
MrRecorder1 (7 years ago)
There is the sexy calculator!!! :D
CiaoBello21 (7 years ago)
He is King Khan.
Cape SIX (7 years ago)
y is this in yours microeconomics videos? this is macro
444zane3 (7 years ago)
hey khan, can you do a video or 2 on 3d graphing basics please? thanks
Danielle Miller (7 years ago)
@MATH7660 you could use any photoshop or photoshop elements and then your tablet.
Danielle Miller (7 years ago)
@kaushiksays dude, this is what you would have to do in an economics course. It's meant to demonstrate a concept of one part of what would happen in the real world.
LightningAlchemist7 (7 years ago)
nice video
Chiah Guo (7 years ago)
if what you care about is the change in totoal quantity(the whole point o f nominal GDP), why don't you measure and compare the quantity in gross production of both years in the first place??
heyas ho (7 years ago)
oohh, so my country's high GDP can be attributed by the rising prices-.-
F. Yo. Couch (7 years ago)
What software are you using?
BlackDeath12345 (7 years ago)
jjake67 (7 years ago)
i like it
KillerWhaleSFl (7 years ago)
I would like to see a video on GDP vs GPI
guyboy625 (7 years ago)
@analyzingfunny yw :)
guyboy625 (7 years ago)
@analyzingfunny Yep. Google "TiEmu"
NZSideways8 (7 years ago)
@SalsaTiger83 Oh yes, thats what I was meaning (how its all black) but yep thats explained better.
SalsaTiger83 (7 years ago)
@NZSideways8 no, that's not because of black background. It's because the video compression tries to encode only the changes. In these screencasts of an image painting program, virtually nothing changes from frame to frame, making this extremely efficient. The codec mostly only has to update the area under the tablet pointer. The same would be true for images with solid white background or even photos in the background.
NZSideways8 (7 years ago)
I dont know if many people notice, but the fact that most of these videos are black makes them really small, the 720p version of this is only 14MB - crazy. My point is that it makes them easy to stream on low bandwidth plans.
GateCrashers (7 years ago)
Great Stuff !!!
uttamo7 (7 years ago)
@cheddyrod this is a really simple example. we could also say its gdp depends on foreign relations, price of oil, UN regulations etc... this is a simplified example to help you understand the basics.
cheddyrod (7 years ago)
Aren't you assuming that the quality of apples are the same? Does that make a difference?
Doodsome (7 years ago)
cheers, mate. makes total sense. Imo the real growth is the only thing that matters. Unfortunately ppl keep forgetting that.
pizzahaleem (7 years ago)

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